At the 18th Annual General Meeting (AGM) of Transcorp Plc held in Abuja, the Chairman, Mr Tony Elumelu, highlighted a critical issue plaguing Nigeria’s power sector: the overwhelming debt owed to power generation companies (Gencos). He urged the federal government to act swiftly in settling the over N2 trillion debts that have crippled the sector.
He highlighted that TransAfam Power, a leading generating firm owned by Transcorp Power, is among those severely affected, with an outstanding debt of N250 billion. Elumelu explained that these debts have hindered Gencos’ ability to pay their gas suppliers, leading to unreliable gas supplies and stalling investments in power generation.
This debt-induced liquidity crisis disrupts the electricity supply chain from generation to end-users. Elumelu emphasized that the power sector is designed to operate in a cycle of liquidity flow and payment assurance. When Gencos are unpaid, they cannot maintain a consistent and reliable flow of electricity.
The Nigerian Bulk Electricity Trading Plc (NBET) alone owes Gencos over N2 trillion, illustrating the sector’s severe financial strain. Elumelu, however, praised the power sector reforms initiated by President Bola Tinubu, which aim to address these financial challenges. He welcomed the federal government’s recent commitment to pay off the debts but stressed the need for swift implementation to translate these promises into tangible results.
“I urge speedy implementation of actions necessary to translate the pronouncements to achievements,” he stated.
He stated further that energy theft is another significant hurdle for distribution companies (Discos) and the power sector. The illegal siphoning of electricity results in revenue loss and infrastructure vandalism.
Elumelu called for special courts with powers for summary proceedings to handle energy theft cases swiftly and effectively. “There should also be a process of naming and shaming convicted energy thieves irrespective of their social status,” he suggested.
On the issue of privatisation, Elumelu argued for the full privatization of Nigeria’s power sector, noting that only a partial privatization has been achieved since the process began in 2012. Currently, the federal government owns 100% of the Transmission Company of Nigeria (TCN), retains 40% ownership in Discos, and stakes in some Gencos.
“To enable the sector to be efficiently run by the private sector, I recommend that the federal government develop a clear timeline for the full privatization of the power sector, starting with the Discos and Transmission Company of Nigeria,” Elumelu said.
Despite these challenges, Elumelu expressed optimism about the future. He revealed that Transcorp Power had successfully settled its dollar-denominated acquisition loan, reassuring shareholders concerned about asset dilution. Transcorp plans to increase its combined available generation capacity from 710 megawatts in 2023 to 908 megawatts in 2024.
Additionally, Elumelu outlined plans to enhance the corporation’s financial performance by leveraging innovation, enhancing brand equity, and exploring expansion opportunities in other key sectors. “In 2024, we plan to continue the strong group’s financial performance by maximizing the potential of our subsidiary businesses,” he stated.
“I look forward to a fully reformed and unleashed Nigerian power sector, fully contributing, as it must, to Nigeria’s economic renaissance and social rebirth,” Elumelu concluded, expressing confidence in Transcorp’s ability to sustain growth and generate value in the future.
The debt crisis in Nigeria’s power sector has severely hindered Gencos’s ability to operate efficiently, leading to an unreliable electricity supply and stalled investments. Elumelu’s call to action shows the urgent need for the federal government to settle outstanding debts, enforce stricter regulations against energy theft, and fully privatize the sector to unlock its potential.